This year, Georgia was ranked seventh globally by the World Bank in ease of doing business. It also boasts a rich cultural heritage, warm hospitality and unspoiled nature. Here are seven reasons why it’s a pleasure doing business in Georgia.Over the past decade, Georgia, on the boundary of Eastern Europe and Western Asia, has rapidly reshaped itself into an emerging economic gem. This picturesque, mountainous nation of just under 4 million people is described by Sir Suma Chakrabati, President of the European Bank of Reconstruction and Development (EBRD), as “A great success story,” and “One of the top emerging markets, in terms of investment attractiveness.Georgia regained its independence from the Soviet Union in 1991, and it’s been advancing ever since. In 2000, Georgia joined the World Trade Organization, and its progress has been recognized by major global institutions, including the World Bank, which in 2007 named Georgia the world’s top economic reformer. The bank’s Doing Business Report 2020 it ranks Georgia seventh of 190 countries in terms of ease of doing business. The forecast for Georgia’s GDP growth is 4.8% for 2020 and 5% for 2021.Georgia’s labor market is buoyant. According to the National Statistics Office of Georgia, unemployment has fallen consistently for the past nine years. In 2018, it reached 12.7%, its lowest rate in 15 years. Literacy rates are close to 100%, with about 60% of Georgia’s population living in metropolitan areas.
According to Alexander Mironenko, Director of Operations in Georgia for global business process outsourcing company Majorel, over 80% of the company’s local employees are college graduates, or are pursuing undergraduate degrees, “which is not common for the industry that we are in,” he notes. The company recently opened its third office in Georgia and is on target to employ 1,200 staff in the country by 2020. “About 70% of our employees are female, and 80% of our middle and higher management are also female,” adds Mironenko.
Georgia was an early adopter of the World Bank Group’s (WBG) Human Capital Project, whose aim is to accelerate investments in human capital as a critical step toward boosting inclusive and sustainable growth. The WBG team reports that it has “worked with Georgian counterparts to develop Georgia’s Human Capital Index and a strategy to accelerate progress in human capital outcomes.”
Nearly 100%
Literacy rate
E D U C A T I O N
2
Skilled Workforce
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Georgia boasts the world’s third-lowest total tax and contribution rate on profit—9.9%—behind only Brunei and Vanuatu, and corporate income tax is levied only on distributed profits, making it an attractive business environment. Georgia also has the lowest labor tax rate in the world, according to the World Economic Forum. These tax rates relate to the mandatory contributions on labor paid by businesses.
The EBRD also notes that last year the Georgian authorities broadened tax initiatives and simplified taxes for small businesses.eorgia, classified as a transition or hybrid economy, had GDP growth of 4.7% in 2018, and leads the region in the ratio of foreign direct investment to GDP, with FDI totaling $8.44 billion in the past five years.
The economy is also being boosted by increased exports of goods and services and growing domestic consumption. The burgeoning hospitality and real estate industries are being driven by the growing number of international visitors. In 2018 Georgia received 8.7 million visitors (more than double the country’s 3.7 million population), while spending by international tourists has grown by an average of 20% over the past three years. Georgia was the world’s fourth-fastest growing tourist destination in 2018, according to the U.N.’s World Tourism Organization.
The country is seen as an attractive destination for investment. The EBRD, for example, has €3.3 billion ($3.6 billion) of cumulative investment in the country, spanning 232 projects to date, which inlcude a current portfolio of 82 pipeline projects totaling €824 million ($909 million), spread across financial institutions, industry, commerce, agribusiness, renewable energy and sustainable infrastructure. Another sizeable investor is global energy giant BP, which has invested $4 billion over the 23 years the company has had a presence in Georgia.
8.7 million
(2018)
+10% over 2017
I N T E R N A T I O N A L V I S I T O R S
Written by Gabe Kirchheimer for Bloomberg Media Studios
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This year, Georgia was ranked seventh globally by the World Bank in ease of doing business. It also boasts a rich cultural heritage, warm hospitality and unspoiled nature. Here are seven reasons why it’s a pleasure doing business in Georgia.
Over the past decade, Georgia, on the boundary of Eastern Europe and Western Asia, has rapidly reshaped itself into an emerging economic gem. This picturesque, mountainous nation of just under 4 million people is described by Sir Suma Chakrabati, President of the European Bank of Reconstruction and Development (EBRD), as “A great success story,” and “One of the top emerging markets, in terms of investment attractiveness.”
Source: National Statistics Office of Georgia
G E O R G I A A T A G L A N C E
Population
3.7 million
GDP Forecast 2020
4.8%
FDI (2014-18)
$8.44 billion
Capital
Tbilisi
T O P E X P O R T S 2018
$504 million
Copper
$353 million
Ferroalloys
K E Y T R A D I N G P A R T N E R S BY TRADE SHARE
EU
$863 million
Refined Petroleum
Cars
$613 million
T O P I M P O R T S 2018
GEORGIA AT A GLANCE
Population
3.7 million
GDP Forecast 2020
4.8%
FDI
$1.23 billion
Capital
Tbilisi
T O P E X P O R T 2017
Copper
$518 million
Ferroalloys
$318 million
11%
Russia
K E Y T R A D I N G P A R T N E R S BY TRADE SHARE
27%
EU
13.6%
Turkey
Refined petroleum
$702 million
Cars
$380 million
T O P I M P O R T 2017
Six Reasons to Do Business in Georgia
Why Do Business in Georgia?
Georgia regained its independence from the Soviet Union in 1991, and it’s been advancing ever since. In 2000, Georgia joined the World Trade Organization, and its progress has been recognized by major global institutions, including the World Bank, which in 2007 named Georgia the world’s top economic reformer. The bank’s Doing Business Report 2020 it ranks Georgia seventh of 190 countries in terms of ease of doing business. The forecast for Georgia’s GDP growth is 4.8% for 2020 and 5% for 2021.
+5%
2021 forecast
G D P G R O W T H
1
Stable & Progressive
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Georgia’s labor market is buoyant. According to the National Statistics Office of Georgia, unemployment has fallen consistently for the past nine years. In 2018, it reached 12.7%, its lowest rate in 15 years. Literacy rates are close to 100%, with about 60% of Georgia’s population living in metropolitan areas.
According to Alexander Mironenko, Director of Operations in Georgia for global business process outsourcing company Majorel, over 80% of the company’s local employees are college graduates, or are pursuing undergraduate degrees, “which is not common for the industry that we are in,” he notes. The company recently opened its third office in Georgia and is on target to employ 1,200 staff in the country by 2020. “About 70% of our employees are female, and 80% of our middle and higher management are also female,” adds Mironenko.
Georgia was an early adopter of the World Bank Group’s (WBG) Human Capital Project, whose aim is to accelerate investments in human capital as a critical step toward boosting inclusive and sustainable growth. The WBG team reports that it has “worked with Georgian counterparts to develop Georgia’s Human Capital Index and a strategy to accelerate progress in human capital outcomes.”
Nearly 100%
Literacy rate
E D U C A T I O N
2
Skilled Workforce
1234567
Georgia boasts the world’s third-lowest total tax and contribution rate on profit—9.9%—behind only Brunei and Vanuatu, and corporate income tax is levied only on distributed profits, making it an attractive business environment. Georgia also has the lowest labor tax rate in the world, according to the World Economic Forum. These tax rates relate to the mandatory contributions on labor paid by businesses.
The EBRD also notes that last year the Georgian authorities broadened tax initiatives and simplified taxes for small businesses.
9.9%
Tax and contribution rate on profit
T O T A L T A X R A T E
3
Simple Tax System
1234567
Once a strategically important link on the ancient Silk Road trading route, Georgia, bordered by the Black Sea, Russia, Turkey, Armenia and Azerbaijan, has prioritized reconnecting its trade links throughout the world. Having established 19 wide-ranging free-trade agreements (FTAs), Georgia has access to a market of 2.3 billion consumers—including those within the European Union, China, Turkey, Ukraine and the CIS and EFTA countries. A proposed series of FTAs, including Georgia-Israel, Georgia-India and Georgia-U.S., are also under development.
According to Chakrabati, Georgia’s “ultimate ambition is to join the European Union.” Georgia signed an Association Agreement with the European Union in 2014, which included a Deep and Comprehensive Free Trade Area and visa-free system.
19
Free-trade agreements
M A R K E T R E A C H
4
Access to Global Markets
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Georgia, classified as a transition or hybrid economy, had GDP growth of 4.7% in 2018, and leads the region in the ratio of foreign direct investment to GDP, with FDI totaling $8.44 billion in the past five years.
The economy is also being boosted by increased exports of goods and services and growing domestic consumption. The burgeoning hospitality and real estate industries are being driven by the growing number of international visitors. In 2018 Georgia received 8.7 million visitors (more than double the country’s 3.7 million population), while spending by international tourists has grown by an average of 20% over the past three years. Georgia was the world’s fourth-fastest growing tourist destination in 2018, according to the U.N.’s World Tourism Organization.
The country is seen as an attractive destination for investment. The EBRD, for example, has €3.3 billion ($3.6 billion) of cumulative investment in the country, spanning 232 projects to date, which inlcude a current portfolio of 82 pipeline projects totaling €824 million ($909 million), spread across financial institutions, industry, commerce, agribusiness, renewable energy and sustainable infrastructure. Another sizeable investor is global energy giant BP, which has invested $4 billion over the 23 years the company has had a presence in Georgia.
8.7 million
(2018)
+10% over 2017
I N T E R N A T I O N A L V I S I T O R S
5
Investment Opportunities
1234567
In recognition of Georgia’s streamlined regulations, favorable tax policies, competitive business operating costs and liberal foreign trade policies, the World Bank’s most recent Doing Business Report rankes the country seventh, out of 190 nations in ease of doing business. For example, establishing a company in Georgia is simple and rapid, and most foreign-owned businesses can be registered with one procedure in a single day.
The World Bank report compares business regulations in countries around the world, regarding of obtaining construction permits, registering property, getting credit, protecting minority investors, trading across borders and enforcing contracts. Georgia ranked highly in most categories.
7th
Doing BusinessReport 2020
W O R L D B A N K R A T E D
7
Ease of Doing Business
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Georgia is a country of scenic contrasts and diverse climates at the crossroads of Europe and Asia. Although only 70,000 km in size, Georgia has very varied and stunning topography, with the Greater Caucasus mountain range to the north and the Lesser Caucasus to the south. The climate ranges from year-round snow and glaciers to the humid subtropical area along the coastline of the Black Sea, where palm trees are a familiar sight.
Tbilisi, Georgia’s historic capital and largest city, with 1.3 million residents, has been an important political, economic and cultural center since at least the fourth century. Archaeological records show that the area was settled as early as the fourth millennium B.C. The city hosts a wide variety of cultural, historic and artistic offerings, luxury hotels, cosmopolitan nightlife and, of course, fine wine.
Georgia lays claim to having the oldest wine industry in the world, with evidence of winemaking 8,000 years ago. Produce from Georgian vineyards makes wine the country’s fourth-largest export. In recognition of Georgia’s streamlined regulations, favorable tax policies, competitive business operating costs and liberal foreign trade policies, the World Bank’s most recent Doing Business Report rankes the country seventh, out of 190 nations in ease of doing business. For example, establishing a company in Georgia is simple and rapid, and most foreign-owned businesses can be registered with one procedure in a single day.
The World Bank report compares business regulations in countries around the world, regarding of obtaining construction permits, registering property, getting credit, protecting minority investors, trading across borders and enforcing contracts. Georgia ranked highly in most categories.
